I initiated this report in May. I have waited to see if the missing accounting documents of the EUC were published and because of the proximity of the AGM I’ve decided do not wait any longer.
As of May, on the EUC Costa Esuri website I have only seen published the summary and detailed Revenue and Expenditure report for the year and the Summary Accounts for 2020.
I don’t know the reason why the accounts, the quarterly Balance Sheets for the Audit of Amounts and Balances, the Opening and Closing Balance Sheets, the Profit and Loss Account (Income and Expenditure) and the Balance Sheet for the Financial Year, nor the accounting report, have not been published.
As I have commented on the accounting documents for the fiscal year 2019, those presented for the year 2020 so far, do not comply with the rules of accounting law and failure to publish the Annual Report does not comply with the accounting principles and criteria taken into account when formulating them.
In my opinion, the documents published are not sufficient to show the faithful image of the Entity, the information of the previous year is not shown to be able to compare, the Report, the Profit or Loss Account and the Balance Sheet are missing, these documents are required by the accounting regulations and by-laws of the Entity.
However, I would like to comment on the documents submitted so far.
Budget for the financial year 2020.
The budget presented for the year 2020 follows the format of previous years, without any year having been compared with the actual expenditure of the year to know its appropriateness and necessity.
Some generic budgeted costs are included without any idea of action or need, just in case they occur. Only the maintenance costs by Confortservi, the administration and management costs, the CR insurance of the Governing Council, the estimated collection costs by Gestión Tributaria, are known for certain, and the rest are based on estimates.
The fees payable by the owners, are based on a budget of expenses calculated in excess, because it is estimated that only about 60% of the fees are collected voluntarily and this amount plus the collections in executive procedure have to cover the expenses already contracted and other possible expenses.
In the year 2020, an item entitled “Payment of outstanding debts” amounting to
€ 69,440.58 for interest on Confortservi’s arrears were not included in the accounts or in the documentation for the 2019 financial year in the Payments to be made at the end of the financial year.
My question is, why have these interests been generated and paid? Are there any contracts or court decisions that oblige the EUC to pay them? What interest rate has been applied, how have they been calculated?
The forecast of the expenditure for the management service of the collection of fees provided by the SGTH has been raised by 25%, 10,000 euros more. We should know the content of the agreement signed with the SGTH and know how much the payment costs in voluntary period and how much in the executive procedure.
In the income section, contributions revenue is budgeted at €950,000, of which an estimated €350,000, or 36.84 per cent, will not be collected during the year. It is estimated that €45,000 euros will be collected in the executive procedure.
This document is presented to date without the identification of the Entity, year to which it corresponds, date of approval by the Governing Council, and neither does anyone sign it. What I consider a lack of consideration for the members of the Entity because of their lack of rigour.
The Budget was approved at a meeting of the Governing Council in April 2020, but I consider that the final approval corresponds to the General Assembly as established by the Statutes in its article 18. The Assembly is the supreme deliberative body of the Entity and the Governing Council makes proposals to the Assembly and executes the adopted agreements, as well as other functions. In the absence of the Ordinary General Assembly, the budget is provisional.
I believe that the Governing Council, knowing that the Assembly could not be held, should not have formulated a new Budget but should have extended the last approved by the General Assembly, more thinking to include the extraordinary expenditure of €69,440,58 which requires a justification and verification of its legality approved by the General Assembly, with the intention of including the extraordinary expenditure of €69,440.58, which requires a justification and verification of its legality and obligation and which was not urgent.
Income and Expenditure Document.
The revenue for the year from assessed fees receivable is €950,265.86 and €62,575.52 for assessed contributions and interest in urgent proceedings, totalling €1,012,841.38, slightly more than budgeted, because the collections by the executive procedure of previous years have increased.
The amount of outstanding assessed fees for the year is not reported. It is a serious error to mix accrued income from the year with fees received from previous years and not to specify the amount of the penalty and the interest on late payment. You can repeat here the comment I make about 2019 income, mixing amounts earned and collected.
In 2019, it was reported that €1,386.66 had been claimed to a Portuguese insurance company for damage caused by a vehicle. In the income statement it does not appear and it does not appear in the justification of the balance so I ask, have the €1,386.66 been collected?
The total expenses amount to €634,637.15. In the expenses the increase of the amount of invoices of Confortservi that goes from €423,360.40 in the year 2019 to €464,666.64 in the year 2020, which is 15.35% more.
It should also be noted that an extraordinary expenditure of €69,440.58 is included. This item is included in the budget for 2020 and I have already mentioned it in the budget section, where it says that it corresponds to outstanding debt for interest with Confortservi and the amount of this debt did not appear in the accounts of the year 2018 nor in those of the year 2019 which has no justification.
If the debt was from previous years and was recognised by contract or court order it should be included in the accounts of previous years and should not be included in the expenditure for the year 2020.
As in previous years, the denomination of some items is changed or new items are included.
- The expenses for 2019 are not presented, which prevents a comparison.
- Balance Book of Amounts and Balances. Not presented
- General ledger accounts.. Not presented.
- Profit or loss account for the financial year: Not presented.
- Balance of Situation: Not presented.
- Memory: Not presented. In the memory should be the clarifications of all the above.
EXPANDED REPORT (August 2021)
In July, taking advantage of my stay in Ayamonte, I was in the office of the administrator of the EUC and asked him to show the supporting documents he had of the default interest that had been paid to Confortservi for the old debt.
He showed me a Notarial Act dated 30-05-2017 in which a private document of recognition of the debt of the EUC Costa Esuri with Confortservi was published. The private document dated 04-01-2016, is signed by D. Stephen Robert Tipper as President of the Governing Council and by D. Rafael Plácido on behalf of the maintenance company.
The public document is signed by Mr. Jose Luis Redondo on behalf of the EUC, as Vice President replacing the President who had submitted his resignation; Mr. Rafael Plácido by Confortservi and by the Notary.
The document recognizes a debt at 31-12-2015 of €579,109.71 plus the corresponding taxes for work already done and still to be invoiced.
The document does not specify any clause setting out the obligation to pay default interest or the deferral interest rate. There is also no payment schedule.
The calculation of default interest has been carried out by the company Confortservi on the basis of a debt of €583,985.43, calculated month by month since January 2016, applying an interest rate of 3,75%, default legal interest according to the State Budget Laws of the years 2016, 2017 and 2018.
The interest calculated in this way amounts to €69,440.58 and has been paid through two invoices dated 30-06-2020 and 21-07-2020 with amounts of €26,000 and €43,440.58 respectively.
I do not enter to assess the obligation to pay the default interest nor the amount; my objection and criticism is to point out that it was made in the year 2020 in full pandemic, on dates not known whether the Ordinary General Assembly could approve the 2019 Accounts and the 2020 Budget. This is the situation in which the budget for 2019 did not include the debt, but the one for 2020, which is pending approval by the General Assembly yet to be held.
Was it urgent to pay the interest on a debt that has been dragging on since 2016 and in the midst of such an extraordinary situation?
In addition, I allow myself to say that, if the debt was firm in 2016 why are not reflected in the accounts of the following years the interest accrued annually, nor is anything commented in the General Assemblies?
The Governing Council in the year 2018 or 2109 could have informed the members of the EUC of the obligation to pay interest and proposed an increase in the budget or an extraordinary charge, and have negotiated their payment in a way that would be less harmful to the interests of the members of the EUC.
I hope that the Governing Council in the next Ordinary General Assembly in which they will have to present and approve if appropriate the Accounts of the financial years 2019 and 2020, adequately explain this matter, as well as the modification of the contract of Confortservi in the year 2020, when the current contract ended in 2021.
It is for the General Assembly to deliberate and decide on these matters.
I conclude these comments in October with the existing information.
Francisco Tapia Catalán